What Are the Effects of AI & Automation on IFRS

AI and automation are reshaping how companies follow IFRS standards by making financial reporting faster, more accurate, and easier to manage. This transformation, known as AI & Automation on IFRS, is crucial for modern accounting practices.

Introduction to IFRS and Emerging Technologies

What is IFRS, and Why Is It Important?

International Financial Reporting Standards are referred to as IFRS. These international guidelines assist businesses in providing clear and uniform financial reporting. These standards are developed and upheld by the IFRS Foundation.

Businesses that use IFRS accounting make it simpler for governments and investors to comprehend their financial data. The purpose of IFRS is to ensure that reports are reliable, readable, and consistent across nations.

The reporting process is starting to become faster and more accurate as automation and artificial intelligence become more commonplace.

Understanding the effects of AI & Automation on IFRS will help companies navigate the evolving landscape of financial reporting.

Role of AI and Automation in Modern Accounting

AI and automation don’t just make tasks quicker. They also help reduce errors, save time, and support accountants in making better decisions.

Here’s what they help with:

• Sorting and analysing financial information.
• Noticing errors or missed information.
• Numbers that correspond to IFRS accounting standards.
• More quickly than ever before, reports are created.

This is where we start to see the real effects of AI & automation on IFRS.

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Key Areas Where AI and Automation Impact IFRS

Financial Reporting and Data Accuracy

AI improves financial reporting by making data more accurate and organised. It checks large amounts of information and spots errors that people might miss.

How this supports IFRS accounting:

• Financial statements that are more trustworthy.
• Reports that adhere to the IFRS Foundation’s recommendations more closely.
• Delays and adjustments are reduced. 

This is one of the strongest effects of AI & automation on IFRS that companies experience today.

Real-Time Monitoring and Compliance

One major benefit of automation is real-time monitoring. Companies don’t have to wait for the end of the month to check if they’re following rules. The systems can watch everything as it happens.

Why this matters:

• Helps companies follow the role of IFRS on a daily basis.
• Gives alerts when something doesn’t match the rules.
• Keeps the company audit-ready all the time.

Automated Judgments vs. Human Interpretation

While AI is smart, it can’t make every decision. Some parts of IFRS accounting need judgement. That means humans still need to review and decide how to apply certain rules.

For example:

• Deciding when to recognise income.
• Estimating asset values.
• Handling unusual or unclear transactions.

So, even with automation, human expertise stays important.

Benefits of AI and Automation for IFRS Implementation

Improved Efficiency and Cost Reduction

One of the most noticeable role of IFRS  is how much time and money it can save.

Why it helps:

• Routine tasks get done faster.
• Fewer errors means fewer corrections.
• Less staff time spent on basic tasks.

This makes the whole IFRS accounting process smoother and more affordable.

Enhanced Transparency and Timeliness

Companies can now share their financial information faster. Everything is updated in real time, which supports the role of IFRS in promoting clear and timely reporting.

Key improvements:

• Numbers are available instantly.
• Reports are easier to track and verify.
• Auditors and investors get better access to data.

Streamlined IFRS Reporting Processes

AI connects different parts of a business, so financial reports come together more easily.

What this means:

• Better links between systems and data.
• Faster audits.
• Fewer delays when finalising reports.

This also helps with applying IFRS Foundation standards more consistently.

Challenges and Risks of Integrating AI with IFRS

Regulatory Uncertainty and Ethical Concerns

Not all rules around AI and automation are clear yet. This makes things tricky for companies trying to stay compliant with IFRS accounting.

Concerns include:

• Lack of clear laws or guidance.
• Questions about who is responsible for AI-made decisions.
• Risks of unfair or biased outcomes.

This is one area where the effects of AI & automation on IFRS need to be watched closely.

Limitations in Machine Interpretation of IFRS Standards

While AI is capable of recognising patterns, it is not always able to comprehend context. Numerous IFRS Foundation regulations call for judgement, which is difficult for machines to perform.

Problems that can happen:

• Incorrect application of flexible rules.
• choices that are not consistent with actual circumstances.
• excessive reliance on software with no human oversight.

Data Privacy and Security Issues

There are significant duties while handling financial data. Businesses that use automation need to take extra precautions to protect sensitive data.

Possible risks:

• Data leaks or cyber attacks.
• Breaking privacy laws.
• Loss of trust if security fails.

These are serious issues that every company must consider.

The Future of IFRS in an AI-Driven World

Role of Accountants in the Age of AI

AI will not replace accountants. It will change their jobs.

Here’s how:

• Spend less time on routine things.
• More emphasis on problem-solving and analysis.
• closer collaboration with IT teams.

This shift makes accounting more about thinking and less about typing. The role of IFRS will still need skilled people to apply it correctly.

Need for Continuous Updates in IFRS Framework

As AI becomes part of everyday finance work, the IFRS Foundation will need to update its rules.

Why this is important:

• New tools bring new types of data and decisions.
• Companies need clear guidance on using automation.
• Standards must evolve to stay useful and relevant.

This will help IFRS accounting remain effective in a tech-first world.

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Final Thoughts: Embracing Technology with Caution

AI and automation have largely favourable effects on IFRS. They improve data control, speed, and accuracy. However, they also pose risks and raise issues that require careful consideration.

If you work in finance or reporting, here’s what you should focus on:

• Learn how AI tools work and what they can’t do.
• Keep human checks in place for important decisions.
• Follow updates from the IFRS Foundation.
• Stay serious about data security.

AI can be a huge help, but only when people use it wisely. That’s how you make IFRS accounting faster, smarter, and still reliable.

FAQs on What Are the Effects of AI & Automation on IFRS

How does AI help in IFRS compliance?

AI helps by checking data, detecting problems, and making sure reports follow IFRS accounting requirements. It expedites and streamlines compliance.

Can AI fully replace accountants in IFRS reporting?

No. AI helps with data, but humans still make important judgement calls under IFRS Foundation standards.

What are the risks of using automation in IFRS processes?

Risks include unclear regulations, poor machine decision-making, and security issues. These may have an impact on how IFRS functions in practice.

Will IFRS standards evolve to include AI-related guidelines?

Indeed. It is anticipated that the IFRS Foundation will revise its guidelines for businesses using AI in financial reporting.

Partham Barot is an ACCA-certified professional. showcasing his expertise in finance and accountancy. he’s revolutionising education by focusing on practical, real-world skills. Partham’s achievements underscore his commitment to elevating educational standards and empowering the next generation of professionals.

Current Role

Co-Founder & CEO at Zell Education

Education

• ACCA – Association of Chartered Certified Accountants, Finance (2011 – 2014)
• Bachelor of Commerce (BCom), Financial Markets from H.R. College Of Commerce & Economics (2010 – 2013)

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Mumbai, India

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ACCA Certified